Joel Makower is a widely respected writer and consultant on issues of sustainable business, clean technology and green markets. His essays on environmental business and technology are a regular feature of our Sustainability Sundays.

Over the past decade, the progressive business community -- a loose-knit corps of companies with strong social and environmental values -- has been debating a quandary born of its own success: How do entrepreneurs and their investors sell their businesses in a way that allows their owners to reap the rewards of their risk-taking and hard work, but without sacrificing a companys vision and values?

Its no small matter. Several of the icons of socially responsible business have been acquired -- swallowed up, some would say -- by their monolithic brethren: Ben & Jerrys by Unilever, Odwalla by Coca-Cola, Cascadian Farm and Muir Glen by General Mills, Earths Best by Heinz, Boca Burger by Kraft, Stonyfield Farm by Groupe Danone -- and, most recently, Ethos Water by Starbucks. And thats just in the food category. Theres similar M&A action in other sectors. With each new transaction, theres further hand-wringing among progressives, accompanied by spirited debate about whether these developments help or hinder the growth of sustainable business.

The big question, of course, is whether companies with strong commitments to environmental and social sustainability, local economies, enlightened management, and activist politics must realign or even lose their moral compasses when they become part of big business.

Theres evidence that goes both ways: Unilever no longer gives 7.5% of Ben & Jerrys pretax profits to charity. (Ben Cohen still publicly rues the day in August 2000 that he lost control of his company.) On the other hand, Stonyfield Farms CEO Gary Hirshberg got Danone to agree to maintain his companys Profits for the Planet program, which gives 10% of Stonyfields profits to environmental causes -- and to keep the program running for at least 10 years after Hirshberg leaves the company, whenever that is. (Full disclosure: Im currently working on a climate change education campaign funded by Stonyfield.)

And, once in a while, the progressive child infects the stodgy corporate parent: Many of Avedas leading-edge environmental practices are now being adopted by Estee Lauder, which acquired Aveda in 1997.

Not all socially responsible companies get bought by bigger ones. Some entrepreneurs simply want to sell -- to cash in, trade up, retire, or move on to the Next Big Thing. They, too, face the challenge of doing so in a way that honors the companys vision, the employees who helped build it, and the community that supported it.

To address these challenges, two investment funds are under development to help ensure a smooth, profitable, and responsible transition for socially responsible businesses. Both were introduced this weekend at the Social Venture Network Annual Member Gathering in Tarrytown, N.Y., from where this is being written.

The first, Upstream 21, aims to put investors capital to work in local communities by purchasing small, successful progressive companies. The fund is a spin-off of Portfolio 21, the Portland, Ore.-based mutual fund investing in sustainable businesses.

We believe that corporations should not be required to maximize wealth for shareholders at the expense of employee, the community, and the environment, says Leslie Christian, chair of Upstream 21 and president of Portfolio 21.

Christian explained to me that Upstream will work as a holding company for firms that pass muster. The very first screen we have is the question, Is the product or service of this company part of our vision for a sustainable future?

She offered a few hypothetical examples of how the fund will work. In one case, the founder of a successful company wants to retire, but the employees arent in a position to purchase it. Upstream 21 could buy and hold the company and help transition it to employee ownership. In another example, the fund might buy and hold a company, taking over some administrative tasks and offering guidance and counsel, but letting the company continue operating as is.

One of the things we believe in is keeping money in the region, says Christian. One of the signs of a healthy economy is circulation of that money in that economy. One way is to have locally owned business. Another is by paying dividends in the local community. This is about local business being the answer to our problems and the future of our economy. If we dont have a strong state of local economies on this country, were in big trouble.

The second emerging entity is called the Circle B Fund. (B because we aspire to B the change we seek in the world. Circle to represent our interconnectedness to each other, the planet, and future generations.) Circle Bs model would invest in and support a new type of corporation -- the B corporation or B corp -- which would exist for the benefit of all stakeholders, not just shareholders. B corps are "for-benefit" companies -- private, socially responsible companies that donate all of their profits to charity -- the Newmans Own model, since replicated by others.

Unlike a social venture fund, Circle B will sometimes take majority interest in B corps, ensuring long-term, institutional, mission-aligned stewardship, according to a short introductory document. Circle B investors will receive capped, debt-like returns. Returns above inflation-adjusted capital repayment will be retained and used by the fund to finance additional B corps or invest in marketing and advocacy.

Like Upstream 21, its still early-stage. The Investors Circle Foundation is incubating Circle B as part an effort to catalyze new intermediaries to increase the flow of patient capital to truly alternative investment classes, says Jay Gilbert, one of the funds organizers.

The foundation is hosting a workshop on June 4 at the Investors Circle Members Retreat on Marthas Vineyard for entrepreneurs and investors active interested in this new space. The goal is to emerge from the workshop with a clearer understanding of what the fund will look like. (For details, contact Jay Gilbert.)

It will be several months before either Upstream 21 or Circle B is up and running, but already they are sending a signal: socially responsible companies can grow and prosper with the knowledge that cashing in doesnt necessarily require selling out.

This is very encouraging, since one of the Big Challenges has been to provide investors with a "exit strategy" that's not locked into the "gimme more and make it faster" logic that seems to dominate these days.

Some other data points that come immediately to mind:

- Jeffrey Hollender so rued the day he sold his company, Seventh Generation, that he took it private again -- and calls going public his biggest business mistake ever.

- Gary Erickson, on the verge of selling ClifBar, walked into the deal-signing meeting and said "no deal."

This question is trickier than it sounds, though. In 2004 I was at a conference in Paris where Ben Cohen was speaking, as was Beth Doyle, director of Good Vibrations (a famous co-op sex toy store in San Francisco). She talked about how proud Good Vibrations was to have kept their original vision intact, but said that it had forced them to remain very small. On the flip side, Ben & Jerry's as a company has not stayed as pure, but the revenues have become so vast that Ben Cohen was able to found True Majority, which is far bigger than the charitable contributions the small-scale pre-buyout company was.

"Which route is better?" I'm not sure it needs to be an either/or proposition. Upstream 21 and Circle B could enable those who want/need to stay small and local to do so, and those who want to cash out big-time, but not at the expense of their companies' values, to do that as well.

Is it possible for a business to develop but not grow beyond a certain point? Can a web of small-to-medium-sized business organize as a union or cooperative? Could there be real power and leverage in a web of small businesses rather than an amalgamation into one large business? I know this has been tried before, without much success, but we have new tools and cognitive models now. Do businesses keep growing because they must, or because of the mental models of the folks who manage them?